Dell in 'Advanced' Buyout Talks with Compellent, $876 Million Offer on the Table

By Beecher Tuttle December 09, 2010

Dell confirmed on Thursday that it is in "advanced discussions" with storage company Compellent Technologies on a potential buyout deal.

While the agreement has yet to be consummated, Dell noted that it has offered the enterprise storage solutions provider $27.50 per share, which is less than what the company's stock has been trading for in recent months.

The fact that Dell publicly announced the details of the offer was a bit puzzling to most analysts. Soon after the release hit the wire, Compellent's stock tanked to a recent low of $28.58 a share. Just a few days ago, the Minnesota-based technology company was trading at 52-week high of $34.16, according to Daily Finance.

If the deal is finalized at the price in question, Compellent would receive $876 million in cash.

"There can be no assurances that an agreement will be reached or that a transaction will be consummated," the companies said in a joint statement. "Dell and Compellent do not intend to comment further until an agreement is reached or discussions are terminated."

The fact that Dell is going after a storage company shouldn't be all that surprising. Earlier this year, the computer giant got into a bidding war with Hewlett Packard over 3Par, a competitor of Compellent. Dell lost out on the data storage company after HP offered 3Par $33 per share, which added up to a whopping $2.35 billion.

Since then, the media has been anticipating that Dell would make a run at a company like Compellent to get itself into the thriving cloud computing space. In fact, speculation over a potential acquisition was the main driver behind the recent rise in Compellent's stock.

Meanwhile, most analysts have been rather lukewarm over the potential acquisition, noting that Compellent is a significant step down from 3Par.

In related news, the market research firm iSuppli reported earlier this week that Dell held on to its position as the world's second largest PC manufacturer, just edging out Acer for the second time in as many quarters. Dell PC sales were up 7.2 percent compared to the Q2.

Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Juliana Kenny

TechZone360 Contributor

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